County looks at option for insurance

The county has options if officials choose to opt into partially self-funding employees’ health insurance.

Jay County Commissioners heard one of those options Tuesday.

Michael Harmon, a representative of ParetoHealth, shared details about his company’s work with helping groups to partially self-fund their employees’ health insurance.

ParetoHealth has more than 2,700 members nationwide, covering more than 850,000 individuals. Harmon explained ParetoHeatlh is a captive manager that works with stop-loss insurance carriers to help provide groups with partially self-funded insurance.

If the county chooses to join ParetoHealth, it could keep the same plan designs for its employees under its current network, Physicians Health Plan.

Harmon compared projected costs if the county were to continue to operate under a fully insured model. Next year’s premium renewal is estimated at $1.6 million, with annual increases thereafter coming in at an average of 9 or 10%, or a projected $25 million over 10 years.

Switching from fully insured to self-insured status includes paying a benefit administration cost — it’s projected at $93,869 annually, or $62 per employee per month — for the health insurance carrier to administer claims. The county would still pay stop-loss insurance premiums to protect itself against large claims or a large amount of unanticipated small claims, with the county paying the first $75,000 in claims for each individual and then the provider covering the remaining cost.

(ParetoHealth estimated the annual stop-loss insurance premium to come in at $599,836.) 

One benefit to ParetoHealth membership includes a 30% rate cap on stop-loss renewal premiums.

Harmon explained the county would have aggregate claims protection, meaning the county would at maximum pay up to $1.28 million in small claims. (ParetoHealth projected the county to pay just over $1 million in small claims.)

Commissioner president Chad Aker asked county auditor Emily Franks what the county paid in recent years for health insurance. Franks noted the county is expected to pay $1.4 million for the current year.

Harmon noted ParetoHealth is member-owned. It involves members paying two capital contributions — first at the time they join and then at their first renewal — at about 10% of their annual stop-loss premium cost, or an estimated $59,609. That funding is deposited in an account to be used if needed for claims. (Harmon said ParetoHealth has never utilized funds from its members’ capital accounts but confirmed it could happen.) If a member decides to leave the captive manager, available funding in their respective capital accounts is returned to them.

According to ParetoHealth’s preliminary estimates, the county could save more than $2.3 million over 10 years if it switched to the captive manager’s partially self-funded insurance. Harmon compared the total cost for partial self-funding through ParetoHealth as opposed to the county’s fully-insured premium cost for 2025. With ParetoHealth, the county would likely pay between $1.5 million and $1.7 million in total for partial self-funding as compared to $1.6 million.

Harmon said groups saved an average of 7.5% when switching from a fully insured plan to partial self-funded insurance with the captive from ParetoHealth.

Members benefit from a plan that doesn’t allow new “lasers.” According to the company’s website, a laser is a “separate, high, individual specific deductible that applies to a single, identified person within an individual stop-loss policy.” (Although it doesn’t allow for lasers to be added to plans at renewals, lasers identified at the time a group joins ParetoHealth membership are still in place.)

On average, Harmon said, ParetoHealth has a 96% annual retention rate with groups joining its membership. He pointed out other industries aiding in partially self-funded insurance have on average 60% retention rates.

Jessica Clayton, who currently serves as the county’s insurance broker through OneDigital, noted partially self-funded insurance can be detrimental to a group if established incorrectly. She suggested a captive manager like ParetoHealth is the safest way to begin partially self-funding health insurance.

Harmon pointed out the financial aspects he shared Tuesday are still estimates and that it would take about a week to secure hard numbers. He asked commissioners to consider ParetoHealth and let him know if they are interested in joining its membership.

Aker questioned why OneDigital hadn’t offered the option before to the county, with Clayton noting financial troubles for the last several years. She pointed out when they last considered partial self-funding, it would’ve initially increased the county’s contribution.

Commissioners will hear from another option for partially self-funded insurance at their next meeting Friday.